Is your 3PL holding out on you?Download this e-book to discover 10 powerful strategies for immediately improving your supply chain efficiency and effectiveness. Is your 3PL sharing them with you? If not, maybe you should contact Landair. We make a guaranteed commitment to add value.
Click for more information.

Join our panel of leading economic and transportation analysts as they share their exclusive insight on where rates are headed and the issues that will be driving those rate increases over the next 12 months.

Covered had 2012 revenues of approximately $27 million, and the purchase price was $8 million in cash and $3 million in XPO common stock, excluding any working capital adjustments, with no assumption of debt, said XPO. Covered was established in 2005 and has more than 4,000 carrier relationships; it serves shippers in the manufacturing, postal, consumer and oil and gas sectors, with about 40 employees in offices in Lake Forest, Illinois and Dallas, Texas according to XPO. It added that its co-founders Tuck Jasper, Paul Jasper, and Patrick Gillihan will remain on board to lead operations, and Covered will be rebranded as XPO Logistics.

XPO Logistics CEO and Chairman Bradley S. Jacobs told LM that XPO will provide access to XPO’s network, which is comprised of 22,000 carriers, along with Covered’s 4,000 carriers, which he said will have a positive effect on XPO’s system in terms of both pricing and finding trucks.

“We knew of Covered from a mutual friend in the freight brokerage business in Chicago that said it was a real strong company, and we have been going back and forth with the Jaspers and Gillihan for the better part of a year and getting to know them better and them getting to know us better,” he said. “We wanted to understand their customers better and their carrier base and how it would all fit in with ours. We got to know each other and liked each other and wanted to make a deal.”

Along with significantly upping its carrier base from 4,000 to 26,000, Jacobs said Covered will have access to XPO’s freight optimizer tool, which takes internal and external information presented in a concise way to its sales staff to guide them on what the right price should be for a particular load for a particular lane. It also helps XPO’s carrier procurement people know that of the 22,000 carriers it covers who the most likely ones are to want that load—and will give Covered the benefit of knowing pricing history and lane history for all of XPO’s 60 offices and provide clearer visibility for pricing and carrier procurement.

“That is a big advantage compared to going on to public load board and trying to guess what the right price should be,” said Jacobs. “It takes a lot of the guessing out of what the price should be.”

Bringing Covered into the fold marks XPO’s sixth acquisition, with growth by acquisition serving as a major cog in its expansion strategy. Earlier this month, it acquired it the operating assets of Statesville, North Carolina-based East Coast Air Charter Inc. (ECAC), a non-asset, 3PL focused on expedited air charter brokerage. And some of its previous acquisitions include:
-acquiring the operating assets of Turbo Logistics Inc., the freight division of OHL for $50 million last October;
-acquiring Continental Freight Services, a non-asset based 3PL focused on truck brokerage services and based in Columbia, S.C. in May;
-and acquiring Canada-based non-asset 3PL Kelron Logistics in August.

Jacobs said the XPO continues to remain active with acquisitions this year, with the intent to purchase companies with combined historical revenue of at least $300 million.

“We also intend to open at least three freight brokerage cold starts [establishing new operations in new cities] in 2013 and plan to add at least 400 net new sales people in freight brokerage, especially in Charlotte, N.C., Gainesville, Fla. and Chicago,” he said.

XPO said that consistent with its previously announced strategy its investments in long-term growth impacted fourth quarter results, with a net loss of $9.3 million for the quarter compared to a $1.5 million net loss for the same period a year ago. As of December 31, 2012, XPO had $252.3 million in cash.

In its full-year outlook for 2013, XPO said it expects to have an annual revenue run rate of more than $1 billion as of December 31, which doubles its previous run rate of $500 million and would make it one of the largest freight brokers in the United States, according to Jacobs.

For all of 2012, XPO had a total revenue of $278.6 million, which was up 57.3 percent over 2011, with gross margin dollars up 37.1 percent to $40.8 million and gross margin percentage of 14.7 percent.

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!

Get timely insider information that you can use to better manage yourentire logistics operation.

Recent Entries

When an industry is changing rapidly, companies must adapt in order to survive. In this whitepaper, a global publisher was seeking a partner that could mitigate risk and build a platform flexible enough for their shifting customer expectations. The solution enabled the company to rewrite their operations game plan and transform their supply chain.

While it is already reaping myriad benefits from ORION (On-Road Integrated Optimization and Navigation), a proprietary routing platform for its drivers rolled out in late 2013, transportation and logistics bellwether UPS announced big plans for the technology this week.

Article Topics

About the Author

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman.